.....The government continues to think that the way out of the logjam is to lower interest rates. On the contrary, there is a pressing need to increase interest rates. Given the political economy realities it would indeed be heroic if RBI Governor D Subbarao is able to withstand pressures to reduce interest rates........
The very purpose of VITALINFO is to provide a platform for wider dissemination of updated information related to and happening of events in and around RBI.
Monday, June 17, 2013
A long haul - Dr.Subir Gokarn
.....To sum up, we need to come to terms with the fact that a small current account deficit is not an entitlement. It is the outcome of a dynamic combination of facilitating conditions, which need to be created and sustained. A return to the comfort zone of the pre-crisis period requires a structural approach. It will be a long haul, but there is no alternative; and it will be worth it.
Is there need for CAG audit of RBI accounts? - T. V. GOPALAKRISHNAN
.....In these circumstances, it is surprising that there is a vehement call to bring the RBI under CAG audit. That the RBI is corruption-free is a well-acknowledged. Therefore, CAG audit without any strong and justifiable reason will only add to the expenditure of the exchequer. The RBI is perhaps the only institution which is self-disciplined and self-audited, giving no scope for CAG audit in terms of coverage, content and scope and having all possible checks and balances on ‘income and expenditure’. Moreover, the accounts are extensively screened by the statutory auditors appointed in terms of RBI Act 1934, and are made available to the Government for presentation in Parliament......
Good response to coin mela
.............."The idea of conducting a coin mela hit me when I saw people struggling to get small change (coins) when they are travelling in a bus or go to a hotel for tea. Not only are people struggling due to the shortage, even shopkeepers, hoteliers, general stores, stationery shops, bakeries and pan shops owners are feeling the pinch. So we have requested the Reserve Bank of India (RBI) to give coins of the denominations of Rs 1, 2, 5 and 10 worth Rs 4 lakh," .............
RBI ORGANISES CONCLAVE FOR RSETI DIRECTORS
Reserve Bank of India (RBI) Bhopal organised a day-long conclave for Directors of Rural Self Employment Training Institute (RSETIs) here in Bhopal.The Conclave was organised to sensitise the RSETI Directors’ about their roles and responsibilities in providing skill development training for self employment/entrepreneurship development of rural unemployed youth..................
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Govt May Ban NBFCs From Deposit Schemes
.......The
inter-ministerial group, set up after the Saradha Group scam, has
representation from the revenue and economic affairs department in
finance ministry, ministry of corporate affairs, banking sector
regulator RBI and Sebi. To strengthen the existing mechanism, the RBI
will also look at resetting the criteria for registration of NBFCs............
Swimming towards financial inclusion
..........We need to bring banks and other institutions closer to the customer, either via micro branches or banking correspondents, and increase the use of technology. Access to financial institutions is certainly rising. According to the Reserve Bank of India, all unbanked villages with a population of over 2,000 persons, numbering around 74,000, were connected with banking facilities between March 2010 and June 2012. During the same period, more than 70 million basic banking accounts were opened to take the total number of such accounts to 147 million................
Rupee Bank staff may get leaves encashed
Bank Karmachari Sangh (BKS) general secretary and administrator on the Rupee Cooperative Bank Limited Vidyadhar Anaskar said that he would approach cooperatives’ commissioner for encashment of leaves of Rupee Bank staff, who want to resign. ............
Supersession of elected committees
.....The joint registrar of cooperative societies superseded the board after issuing a show cause notice containing 19 charges. The directors challenged the supersession as it was done without consulting Reserve Bank of India. The court directed reinstatement of the board of directors for the full term...........
As business grows, banks allowed to create more GM posts
Due to robust increase in business in the last two years, the Finance Ministry has allowed 15 of the 19 nationalised banks to create up to three additional positions in the rank of general manager. The ministry has also relaxed the guidelines for promotion of officers, who do not have sufficient work experience in rural/semi-urban areas, and specialist officers, who do not have sufficient experience in field operations. Overall, the number of GM positions in the 19 nationalised banks has been increased from 420 to 442. A GM usually heads a business vertical at the head-office or heads a circle office.........
Mis-selling or fraud?
.....From Doctor's experience, one thing is clear: while financial regulators such as the Reserve Bank of India, Securities and Exchange Board of India and the Insurance and Regulatory Development Authority might be taking some corrective steps, the malaise of financial fraud has become deep-rooted.......
A refreshing contrarian
.....It is reassuring that the Governor of the RBI has been lobbying the case for the poor man. He has pointed out more than once the regressive nature of price rise as a tax on the aam aadmi as the raison d’etre for his monetary stance. The nation is grateful to him for his lonely walk on the path of disinflation. He is doing to India what Paul Volcker did to the US in the 1970s and 1980s.......
Penalty passed on...........
Axis bank has already started to recover the RBI 'penalty' from existing customers by informing them new charges for a/c holders by asking them certain charges which were free otherwise and unless you write to them deduction will start from 15 june.If RBI keeps imposing penalties Very soon one can expect 'personal' interaction charges if you wan't to talk to a human being in the Bank.
- Arun Mehta
Shriram Group eyes banking licence
.......Shriram Group’s group director, G S Sundararajan, had earlier told Business Standard that the group’s preference would be getting a separate licence under Shriram Capital, the holding company, and keep the two NBFCs separate from this. “We are definitely going to apply for a banking licence, as it is good for our customers and all stakeholders in the long run,” Sundararajan had told.......
Investors renew faith with bank deposits
.......In an indication that this trend is not restricted only to one particular bank, the Reserve Bank of India too has reported a 13.4 per cent rise in deposit growth at Rs 62,000 crore year on year on 31, which is largely in line with its 14 per cent growth target in the segment for the whole fiscal...........
If RBI can't cut CRR, let them pay us interest on it: SBI
............."If a CRR cut cannot be done due to inflation worries, let the RBI pay us interest on CRR. We will then do the transmission for sure. If the RBI pays me Rs 500 crore on interest on my CRR, I promise to transmit the entire Rs 500 crore to borrowers by reducing my base rate,".............
SBI & conflict of interest
....... Managers in charge at SBI Caps must be evaluated on the outcome of the projects they got the bank to finance and not just on fees earned or league table standing. This is a matter of serious conflict of interest that needs to be addressed.
SBI credit card firm asked to pay Rs 12K for deficient service
A consumer forum has directed SBI Card and Payment Services Ltd to pay Rs 12,000 as compensation to a customer for putting her name in CIBIL's defaulters list despite an assurance that the annual fees of her credit card would be free for lifetime...........
KYC laxity at private banks has put us to loss: SBI
In the wake of the Cobrapost expose on violation of know your customer (KYC) norms by almost all banks, State Bank of India chairman Pratip Chaudhuri has said his bank has been “put to a loss” by the non-compliance of guidelines by private sector peers. “Our bank has been put to a loss because of the relatively lax implementation of the KYC norms, particularly in private banks,”..........
New banks to herald next growth phase for existing ones: Kotak
..............Talking about the potential entry of new banks, Kotak said in his annual letter to the shareholders that the Indian financial space was likely to see new banks in the next two years. "How will they affect us (Kotak Mahindra Bank)? They will increase the pace of competition for talent and customers," he said. He added: "However, going by our experience of the last 10 years, banking, particularly on the retail side, is much more long-haul than we expected when we began our journey...........
Rupee fall, a problem from within?
.....The RBI Governor, D. Subbarao, has been frank enough to admit that any intervention that does not pack the desired punch might backfire. And the biggest limitation for the RBI has been the size of the external reserves, which has been coming down. That, in turn, reduces the quantum of ammunition in the hands of the RBI. Government spokespersons are right in saying there is no need for panic. But it is all too evident that there is no magic wand to wave the marauding dollar away........
Welcome relief, but...
..........These two factors clearly influence the balance between inflation risks and growth payoffs in the current scenario. Under the circumstances, the RBI's decision is certainly not a no-brainer. Even before the rupee began its decline, the RBI governor had said he saw limited room for easing, which has now been further constrained. The question facing the RBI is whether whatever room remains now should be used up as soon as possible, or preserved for a shift in the risk-payoff balance.........
Fall in inflation adds to RBI's dilemma
.........“The rupee’s sharp depreciation since May has clearly made a case for no rate cut. But, since the inflation rate has fallen, RBI will have to take cognizance of that and deliberate if a rate cut is still possible,”.............
Subbarao should wait for Bernanke
...........The outcome of the next Federal Open Market Committee meeting will be announced on Wednesday and any change in its monetary stance, however finely worded, could have significant repercussions on interest rates, currencies and fund flows. Markets around the world are collectively holding their breath, waiting for Bernanke’s clarifications about any tapering of the bond-buying programme. It makes a lot of sense for the RBI to wait, too.
Rupee fall could sway RBI’s rate call
The rupee is likely to be a joker in the pack in the Reserve Bank of India’s mid-quarter monetary policy review announcement on Monday. If the RBI focuses on the upside risk to inflation from the eight per cent depreciation of the rupee against the US dollar, then it might hold off on cutting repo rate on Monday. The central bank may maintain status quo on policy rates in order to assess the exchange rate trajectory and the pass through to prices in a sluggish economy............
Subbarao needs to do a Paul Volcker and raise rates
.....If Subbarao had actually raised rates a few years back when the signs of out-of-control government expenditures were obvious, our growth today would have been higher and consumer price increases lower. Those conditions are still valid today – if Subbarao doesn’t increase the rates on 17 June then the 5 percent GDP growth that we are seeing today would be the ceiling and not the floor, as the government would like us to believe. The near double-digit consumer price increases would be the floor...............
RBI May Hold Rates, Await Clarity on Global Signals
....When
domestic prices and government finances are appearing to be aligning to
facilitate a series of interest rate cuts, the turn in global liquidity
tide, fearing the end of cheap money, has put a spoke in the works.
“Looking at currency depreciation and the global situation, we do not
expect RBI to cut rates,” ...........
RBI likely to press pause button on rate cuts, but may act later
....Should RBI then cut banks’ cash reserve ratio (CRR), or the portion of deposits that commercial banks are required to keep with the central bank, to make monetary transmission effective? Bankers have been strongly pushing for a cut in CRR. This, they say, will enable them to bring down their loan rates. But this, too, is unlikely to happen for two reasons. First, ...........
Volatility is the new normal
..........The Reserve Bank of India’s intervention in such scenarios can only be viewed as an attempt to soothe sentiment and keep speculative activity at bay. It is unlikely to fix the core structural issues that need to be addressed, such as:..............
To Lower NPAs, Buy Defaulters’ Assets, Finmin Tells PSBs
......,
“If you get bids, sell it, but if you get bids less than your reserve
price, don’t sell. Simply transfer it to your assets and reduce your
NPAs. The market is down now, but when it looks up, one should sell.” ...........
Private banks score over public sector peers in 2012-13
....While SBI and nationalised banks (NBs) constitute public sector banks (PSBs), private banks comprise new and old private sector banks. Amongst these banks, PSBs had a market share of around 80 per cent and private banks 20 per cent as on March 2013. Within PSBs, SBI has the largest market share of 19.1 per cent, and the balance 20 NBs account for 60.6 per cent. The NPBs (new private banks) and OPBs (old private banks) account for 15.8 per cent and 4.5 per cent of the market share respectively. The various categories of banks differ in their ownership structure, business philosophy, geographical presence, customer base, technology adoption, manpower profile and governance practices.....
When CAD is so bad, we should just ban gold imports
When your hair and bones start thinning, it is a grim reminder that the inexorable process of ageing has started. You cannot do much about it. But when a country, over the years, suffers from current account deficit (CAD), its currency would get badly mauled. Unlike with ageing, however, one need not resign oneself fatalistically to the inevitable with exchange rates because erosion therein can be halted with some ad hoc and unconventional measures that could raise eyebrows and hackles alike.......
When the Tsunami ebbs
........The dollar has zoomed versus the rupee. That brings the current account deficit (CAD) to centre stage. The Reserve Bank of India (RBI) intervened at least once. It cannot afford to intervene on a regular basis since it must protect its reserves. It is, therefore, extremely likely that the rupee will fall further if FII selling continues, or gains in volumes. Fears of an exploding CAD, and an associated bloat in the fiscal deficit, would be among the key variables D Subbarao considers before announcing the credit policy. The central bank's actions would be primarily designed to stabilise the rupee, rather than to enable growth, or control inflation. Inflation is falling anyway if the latest consumer price index and wholesale price index data are believed. Growth has also picked up a bit, if the index of industrial production is credible............
Top five private banks step up hiring
Leading private sector lenders are in top gear when it comes to expanding their headcount and just five of them, including ICICI Bank and HDFC Bank, added more than 15,000 employees to their payrolls in the last fiscal, reports PTI. The expanded workforce also seems to be giving them rich dividends in terms of improvements in their employee productivity, shows an analysis of the annual staff details of ICICI Bank, HDFC Bank, Axis Bank, es Bank and Kotak Mahindra Bank......
The cumulative costs of India’s debt wish
......The easy monetary conditions across the globe lulled Indian policymakers into making it easier for Indian borrowers to gorge on foreign debt. Then the gaping current account deficit led them to successively increase foreign investment limits in rupee debt since the end of 2011. The market for government bonds was also opened up. The limit for foreign institutional investors to invest in government bonds was raised again on Wednesday. These could prove to be costly mistakes, because they could put economic stability at risk in case there is a wave of global risk aversion........
Nandan Nilekani's Aadhaar project faces fight from a team of Europay, Mastercard & Visa
........But, if the group, constituted by the Reserve Bank of India, prefers Aadhaar, banks will have to change their systems, procure biometric machines and prepare for different security standards. Bankers, however, are reluctant to spell out their stand openly because the government thinks Aadhaar can be a game changer in disbursing subsidies to people in far-flung regions..............
As wire ends & wireless begins, banks tango with telecoms
Financial services are sparse in India’s hinterland; and for those living in far-flung villages, accessing them often means a weary trudge to the taluk. But telecom outlets dot the dusty roads, even in the remotest villages. With a vast infrastructure and a big catchment of users, mobile firms are looking to offer some of the services, if not all, as they hope to move money from a huge cash economy into the banking system.........
Times Group enters education biz with TimesPro
........TimesPro's flagship program - a post-graduate Diploma in Banking Management - will be launched later this month. It will churn out young professionals to meet the huge demand in the banking industry created by the influx of private banks in the next few years due to the amendments made by the Reserve Bank of India.
Having right people on the board is critical to the bank's success: Surrinder Kapur
........The board members have years and years of experience in their respective fields. RBI (Reserve Bank of India) has always said only eminent people should be considered for the board. What I understood from my meetings with the RBI governor was the central bank wanted board members who would represent a specific sector and guide the bank in providing financial services to that sector................
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